The Federal Reserve's Beige Book: More Of The Same

The U.S. Federal Reserve Bank of Kansas City earlier this afternoon issued its Beige Book summation of economic activity across the country, and the findings raised few eyebrows.

Specifically, the survey observed that, in general, the economy had continued to expand at a modest to moderate pace in February. To wit, five of the Fed Districts said growth was proceeding at a moderate rate; five said that growth was going along at a modest gait; and two Districts, Boston and Chicago, opined that growth was still slow.

Moreover, most Districts said that there continued to be gains in consumer spending, although retail sales had slowed in several Districts last month. Also, residential real estate markets were strengthening in nearly all of the Districts, while commercial real estate activity was mixed or improving slightly. Pricing pressures, meantime, remained modest, with the exception of prices for certain raw materials.

At the same time, auto sales remained solid in most Districts, as did tourism, spurred by increased snowfall during the winter ski season. Moreover, non-financial activity continued to grow at a modest level, with St. Louis and San Francisco reporting strong demand for technology, logistics, and marketing and legal services.

Finally, manufacturing conditions were improving in nearly all of the Federal Reserve Districts, a performance that mirrored the recent reported gains in manufacturing by the Institute for Supply Management during February.

Taken as a whole, this report was about as we expected, and seemed to be consistent with the metrics generally reported recently. Such data range from consumer confidence, to manufacturing, to non-manufacturing, and, this morning, to private-sector payroll growth. Upcoming housing numbers, which are due out later this month on housing starts, building permits, and sales of new and existing homes, are expected to be in line with these upbeat findings.

All told, we believe that the nation's gross domestic product will increase by close to 2% in the fast-concluding three months, a showing that would compare most favorably with the negligible 0.1% GDP gain recorded during last year's fourth quarter.

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.